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May 2016

Industry 4.0 is Advancing rapidly in the Kunshan, China electronics manufacturing hub. Will Industry 4.0 be enough by itself to make other areas of the world more competitively suitable for  sourcing?

Kunshan in Jiangsu Province near Shanghai attracts much of its investment from Taiwan. It is now accelerating growth by replacing workers with robots. Thirty-five of the 4,800 Taiwan companies in this area, including Foxconn, spent $610 million on artificial intelligence last year. Foxconn reduced  its labor force there from 110,000 to 50,000 by the introduction of robots. AS many as 600 more Taiwanese companies in  Kunshan are reported to have similar  plans.

The International Federation of Robotics (IFR), which represents robot manufacturers and research institutes, says China has surpassed Japan to become the world’s biggest market for industrial robots.

There is increasing concern about the secure availability of advanced printed circuits for America's defense industry. These are needed to provide the platforms for high tech electronics. R&D for new systems seem to be progressing well. However, the U.S. base of smaller fabricators that produce more than half of military boards is hard pressed to fund the new equipment needed to build these circuits. Costs are often more than 20% of annual turnover. Some fabs, in the Northeast as well as in California, continue to report difficulty in acquiring the skilled workers needed for production. Others cannot modernize or add capacity due to local (state) "environmental" laws and restrictions. Congress is slow to act and too busy with the election to do much of anything this next year. It has funded some major items but do not consider printed circuits a big item. PWBs' importance is still not yet well enough broadly understood. Do you YOU have a comment, recommendation, or solution?

When will 3-D printing for prototyping be at your favorite circuit shop?

It will be sooner than you think - at least for prototyping. One system utilizing an ink containing nano silver particles for fine line printing will be made available commercially by the end of this year. It will be demonstrated at the CES show in LAs Vegas January 2017. The deposited circuit traces may be photonically cured (sintered). HP announced a 3-D new system that is 10 times faster than its predecessors. The insulating substrate may be UV cured epoxy. One such system for epoxy has already been demonstrated in the UK. Get your 3D circuit printing update at the IPC Ambassador Council Executive Forum for fabricators and their supply chain presented by industry icon Dan Feinberg at IPC APEX EXPO in San Diego, February 13, 2017.

Financial news from TAIWAN

Chin-Poon Industrial, with more than 70% of its revenues coming from the automotive industry, announced consolidated revenues for April 2016 increased 5.4% over April 2015 to $58.7 million. The company’s cumulative 2016 sales through April increased 9.3% from a year earlier.

Consolidated revenues at Tripod Technology’s sales were up 1.1% from a year ago to $107 million in April 2015

Compeq Manufacturing had consolidated revenues of $93.9 million in April 2016, down 0.1% from April 2015

Apex International’s April 2016 revenues were $21.4 million a 9.4% increase over last year.

The UK's HK Wentworth, parent company of Electrolube, which supplies sprays and coatings to protect, clean and lubricate electronic circuit boards, switches and sensors, is spending £500,000 to build a new factory to make protective coatings in Bangalore, India.

It's a new era and all about "THE CAR"

SEMI and Georgia Tech, in partnership with iNEMI, IMAPS, and IEEE, will launch a new workshop called FUTURECAR: New Era of Automotive Electronics November 9-10, 2016 in Atlanta, GA. The new era of automotive electronics is the most complex electronics technology to date. It includes not only computing and communications electronics, autonomous driving electronics, sensing electronics but also high-power and high-temperature electronics. It is expected to account for a third of the value of "the car", creating a market of approximately $1trillion within a decade. The challenges to address this market include: 1) research and development of key technologies, and 2) technology ecosystem stewardship to enable swift and cost-efficient commercialization.
The basis of this workshop is the synergy between Georgia Tech in R&D in partnership with its 50 supply-chain companies and SEMI in technology stewardship. This is complemented by the strength of co-sponsors such as iNEMI in roadmaps, and IEEE-CPMT and IMAPS as global electronics societies.

The European Commission said growth in the euro zone and the wider European Union will be slightly weaker this year than previously forecast, as it warned that the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership could weigh on the economy. Economic growth in Gulf States is forecast to slow to 1.8% this year as the oil dependent region cuts spending to battle fiscal deficits reaching 11.6% of Gross Domestic Product (GDP).

A new China target?

French oil and gas producer Total plans to sell Atotech. "Atotech no longer falls within Total's strategic vision," chief executive Patrick Pouyanne was quoted as saying. Total is reported to be seeking a buyer that was "committed to sustaining Atotech's current strategy." Berlin-based Atotech, which generates annual sales of about $1 billion, manufactures specialty chemicals and equipment for printed circuit boards and semiconductors. It is Total's sole remaining specialty chemicals unit.

Apple lost the trademark suit in the Beijing Municipal High People's Court, which ruled that Xintong Tiandi Technology can continue to use the phrase “IPHONE” on its leather wallets and accessories, according to China-based Legal Daily. Chinese regulators reportedly shut down iTunes Movies and the iBooks Store last month.

Billionaire investor Carl Icahn sold his entire stake in Apple, citing the risk of China’s influence on the stock.

SEMI continues to strengthen and broaden its supply chain reach

SEMI has announced the appointment of Melissa Grupen-Shemansky, Ph.D., as Chief Technology Officer (CTO) for the FlexTech Group and for SEMI’s Advanced Packaging program.
With over 20 years of experience in the semiconductor industry, Grupen-Shemansky will oversee FlexTech’s flexible hybrid electronics (FHE) and Nano-Bio Manufacturing Consortium (NBMC) R&D programs and technology advisory councils. Grupen-Shemansky will also serve as technical advisor to SEMI’s Advanced Packaging initiative and as technical liaison to NextFlex, the Flexible Hybrid Electronics Manufacturing Innovation Institute
.
Denny McGuirk, president and CEO of SEMI stated, “With the convergence of technologies and the broadening of microelectronic applications, Melissa will ensure that we are serving our industry’s needs, as well as identifying technology trends and inflections.”

NEPCON China held in Shanghai the last week of April was surprisingly the best in years. Pent up demand for pick-and-place equipment led the surge in active buying interest after a near drought in purchasing the past few years of the economic slowdown there.  The next few weeks will tell just how real the show activity was as stated interest converts to orders.

Firan Technology Group (FTG) is buying the assets of Teledyne Technology's New Hampshire’s printed circuit technology business (Teledyne PCT) for $9.3 million in cash. For approximately 50 years, Teledyne PCT has designed and manufactured rigid-flex printed circuit boards and assemblies used in the defense, aerospace and oil and gas industries. For each of the last three years, the unit has generated between $15.0 to $20.0 million of annual revenue. FTG has two operating units: FTG Circuits is a manufacturer of high technology, high reliability printed circuit boards. FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of aerospace and defense equipment.

April 2016

Renewed faith in America's bare board business?

HCI Equity Partners acquired KCA Electronics and Marcel Electronics International Circuits. HCI also announced the appointment of IPC Director Shane Whiteside as President and CEO. Whiteside had worked with HCI before to form and grow TTM.

APCT Holdings Company, the ownership group of APCT Inc., has acquired the Wallingford Connecticut based printed circuit fabricator, Tech Circuits, Inc.

In Memoriam

We lost another icon this past month, Eugene Ronald Selven. Although he had a long history in the semiconductor industry at such firms as TI, Fairchild, and Raytheon, many of us will best remember him as the Publisher of Chip Scale Review for which I wrote a column for several years. Gene bought the journal from Tessera in 1999 and built it to prominence in the semiconductor industry. What I remember most about Gene was his insight and gentlemanly way of handling challenges. It was always a pleasure being with him to discuss the industry or to exchange "fish stories".  Although he has been retired for a number of years, his passing last month has created a vacuum felt by many. Chip Scale Review continues today under the auspices of Kim Newman, Gene's daughter.

Presidential candidate Donald Trump singled out 3D printing in his first foreign policy speech as one of the advanced technologies that America should develop and protect.

The electro-deposited copper foil industry is booming in China, but not for PCBs and CCLs. The factories are running at full capacity for the battery industry. The significant portion is for electric cars. About 50,000 electric cars were sold in Shanghai alone in 2015. The margins are much better than for PCBs and CCLs, so it is anticipated that price and delivery issues will arise. The batteries are primarily made in Asia.

The market for assembly (SMT) equipment and robotics has improved substantially in China this month. It appears that some companies could no longer delay purchases of equipment that had been on hold. The same recovery has NOT yet been noticed for bare board fabrication systems.

In a recent “It’s Only Common Sense” column Dan Beaulieu wrote, “And the cold hard fact is that the smaller guys are on their own. They have no one to look out for them, no one at all. Over the years, IPC has made it abundantly clear that they have a vast amount of interest in the big guys, but very little interest in the smaller shops.” Then Dan went on to list 10 advantages that he felt smaller fabricators have over the “big guys.”

I have a different view. The IPC does not work for any individual company. It DOES work for most companies if they actively participate together as a group in activities that are in their best collective interests. The IPC interacts with our government in behalf of all interconnect companies. It provides a vehicle whereby a class or group of members can get together and work on programs for their MUTUAL benefit.

The IPC is reinventing itself. It does more than just develop standards. It offers training for member companies and its employees. It provides focused showcases for its members’ products and services combined with a major conference every year. It recognizes that the electronic supply chain is changing and new solutions must be found as more and more systems bring silicone and components closer together in packages.

It recognizes the global world of packaging and works to the benefit of all its members. It fosters cooperation and consortia to the benefit of its fabricators, assembly and packaging members…and industry.

The IPC even has a Vice President in charge of Member Success. Changes are inevitable. Major consolidations have reshaped the industry. Supply chains are changing. Those that wish to avoid the fate of buggy whips should rethink their company strategies.

To this end I am working towards presenting a PCB Executive Forum, under the auspices of the IPC, to be held at the next IPC APEX EXPO event in San Diego next February. It will be focused on helping the “smaller companies” overcome today’s industry challenges. It will be designed to help CEO’s, Presidents and company owners solve some of the problems they face in today’s environment. All members of the bare board fabricating community as well as their supply chain will be invited to attend, even if they are not currently members of the IPC.

Chinese counterfeiters caught with the goods

Daofu Zhang, 40, of Shenzen, China, pleaded guilty this month in New Haven federal court to conspiring to sell counterfeits of sophisticated integrated circuits to a purchaser in the United States. His co-conspirator Yan proposed to supply the U.S. source with “fake” ICs that “look the same,” to replace the ones to be stolen from the military. Yan and another co-conspirator, Zuo were also apprehended and plead guilty last month. The case is being prosecuted by Assistant U.S. Attorney Henry Kopel* and U.S. Department of Justice Counterintelligence and Export Control Section Trial Attorney Casey Arrowood. *Kopel is the son-in-law of Gene Weiner, Publisher of Weiner’s World.

We have been predicting this for the past several years

Taiwan-based PCB players are pushing into car-use products as demand for PCs, smartphones and tablets has been weakening. Chin Poon (experiencing record profits) and Tripod Technology, which have been operating in the car-use PCB market for a long time, are looking to expand their presence in the market, while newcomers including Unitech, Unimicron Technology, Global Brands Manufacture (GBM), Apex International, Zhen Ding Tech, and Ichia have been trying to catch up. With demand for smart car applications including Internet of Things (IoT), semi-auto drive, infotainment systems, around-view monitoring systems, parking sensors and portable navigation devices, growing rapidly, demand for related upstream components such as PCBs is rising, and many PCB makers are aggressively looking to grab a share of the market. Car-use components require certification from car vendors, and the process usually takes more than 2-3 years. (Source DIGITIMES, April 14)

A senior ADI manager said to us, "Today, automotive is everything!"

We just received a solicitation from a board fabricator offering the following

  -Express PCB Prototyping(2-40 layer) 

-HDI PCB with 4mil laser holes -Flexible Printed Board(1-8 layer)

-Flexi-rigid Printed Board

-High Frequency Board (Rogers,Arlon,PTFE) 

-Blind/Buried Via Board

-High Tg Thick Copper PCB (Up to 12 oz with TG210)

-Mix-Material(FR-4+Rogers) Multilayer PCB 

-Embedding Resistance/Capacitance Board 

Halogen-free/Lead-free Board

-Thick Gold Plating/Immersion Gold/ENEPIG Board

Yep! You guessed it! It came from China. How many of America's remaining 200 or so board builders (excluding those "giants" with multi hundred millions in sales) can match all of the listed 11 items as a service? Do you consider the ability to build lots of 20 or 100 complex HDI boards at a time in a secure U.S. location necessary for America's defense? If so, who will support the acquisition of the capital equipment needed to do so? Who will provide (pay for) the expensive secured digital network required by prime contractors (Raytheon, Lockheed, Boeing, etc.)? The latter could cost up to a million dollars - a bit on the "rich side" for shops with an annual turnover of just $10 or $15 million or so.

Caveat emptor

The April 15 online edition of PCB Update had a column by Peter Bigelow, President and CEO, of IMI that offers very sound advice worth repeating in the wake of a number of recent industry false starts and overly ambitious claims. A very brief summary is below.

Be judicious when studying “game-changing” technologies! Improvements pitched as being the elusive “one size fits all” breakthrough usually are not. We must be diligent, using rigorous analysis and verification, to avoid processes that are oversold but underperform. If a new material, machine, or  process simplification does not improve overall quality, add to overall capability, or have a measurable, favorable impact on cost, it most likely is not worth the effort. Many very interesting – and promising – technologies may be game-changers for us all. However, some, such as conductive inks, have been around for decades but are still just not ready for prime time. Others may have the potential to transform the industry in ways unimaginable just a few years ago. We need to be aware and inquisitive about all but not allow ourselves to become too mesmerized by any until they demonstrate tangible and proven value.

Intel said it plans to reduce its global workforce by up to 12,000 jobs, or 11%, as the semiconductor giant reported a worse-than-expected 7% increase in first-quarter revenue. The chip maker said the job cuts are part of the company's restructuring away from a computer-based company to one that powers the cloud and billions of connected computing devices. (Source WSJ)

Chinese direct investment in the U.S. rose to a record last year. China's investors placed $15+ billion into 171 transactions in the U.S. According to Rhodium’s China Investment Monitor, they helped add 13,000 full-time jobs for Americans last year.

The joint IPC APEX HKPCA show in Shenzhen China is now be the largest in the printed circuit industry. It will be about 500,000 square feet at the next edition in December 2016. That's four times the recent IPC event in LAS Vegas.

BPA’s short term PWB forecast for 2016 is essentially flat with different segments increasing or declining as in the following summary:

  • Consumer – falling levels of demand
  • Automotive – healthy demand and a bright spot supported by new applications
  • High speed equipment – steady demand
  • Computers – flat or decline
  • Medical and industrial – steady demand growth
  • Handsets – flat
  • Military – flat
  • Aerospace – steady demand

BPA’s 2016 worldwide semiconductor forecast is suggests that we will see a flat year to a single figure contraction (in semiconductor value terms) of shipments compared to 2015. With the macro economic factors as they are at the time of writing, the analysis would conclude that 2016 sales growth will be flat compared to 2015. However, the less optimistic outcome (supported by the semiconductor forecasts), may well be a contraction of between 3-5%.

Hope is NOT a good reason to exhibit

Nothing really new was seen at 26th Flat Panel Display Expo (FINETECH JAPAN) early this month. Primary exhibitors were chemical, material, and manufacturing equipment firms. Most presentations were improvements in existing products. For example in the case of thin films: less thickness, higher heat resistance, longer flexing endurance, smaller loss with high frequency, or higher dimensional stability - rather than something truly new. Kenshi (Dominique) Numakura, DKN Research covered the show. He  stated that these companies were not expecting a huge amount of business; their goal was to engage some potential customers for a future business relationship. A marketing representative from a large company told him that "he had hopes" of attracting one customer with future product application needs. Numakura said, “Everyone in Japan is trying to scratch out a living. No one has thrown in the towel yet, and they all need one lucky break.”

Never ending

When I first started in this industry nearly 60 years ago there were just two major shows: NEPCON East at the Coliseum in New York, and NEPCON West at the Anaheim Convention Center. This then grew to two major show seasons which added exhibits across the Atlantic River (in the UK) and the Pacific Pond (in Japan*) the Spring and Fall. Now it appears to be one long never ending season that all too often shows little that is truly new, presents a major step forward, or a potentially disruptive technology. Visitors roam through these (often regional) events hoping to find that magic bullet that will propel them forward into better yields, lower costs, or a new opportunity. The next such "major" event is NEPCON China 2016 at the Shanghai World Expo & Convention Center April 26 ~ 28.

*(I presented a technical paper at the first INTERNEPCON JAPAN in the early  70s when I was VP of Business Development  of OXY Metal Finishing - a subsidiary of Occidental Petroleum).  Can you guess at just came in by email ? An advertisement   for INTERNEPCON Japan, January18 20, 2017 !

Market penetration by "dumping" used refurbished products?

Apple will try to gain some traction in the world's 2nd largest mobile phone market (India) by importing and selling refurbished iPhones. Apple, which has 2% of the market, is meeting resistance from its "local" competition and may once again be denied access via this route. 4/5 of smartphones there cost less than $150 with some branded phones priced as little as $35.

The Board of Directors of China telecommunications equipment maker ZTE will meet this month to replace three of its most senior executives as a result of the company being accused of violating of U.S. trade rules. The U.S. Department of Commerce slapped trade sanctions on ZTE last month, claiming that it violated rules by exporting American technological goods to Iran and other nations.

IDC announced that the fast-growing 3D printer market continues to be dominated by foreign brands although Chinese vendors are catching up and growing faster. The top five players in the China 3D printer market are all foreign brands: EOS, Stratasys, Renishaw, ZRapid, and Solidscape. Stratasys (Makerbot) and 3D systems also headed the list for desktop models, but the rest of the top five in this category belong to Chinese vendors Xery, Flashforge, and Beijing Tiertime. In terms of China's export market for desktop 3D printers, the top 3 brands Flashforge, Beijing Tiertime and Winbo account for 50% of the market.